It’s never too late to boost your super

Retirement may only be a handful of years away, but it’s not too late to make a significant impact on your super.

In fact, the lead up to retirement is the time you’re likely to be in the best position to do just that. The kids are hopefully long past needing your financial help, you’re probably in your peak income earning period and with any luck, your mortgage is paid off.

Anything you can add to your super balance during this period will make a difference.

If your super balance is $55,000, and you could lift it to $75,000 over the final years of your working life, you can expect your retirement income to go up by 10 per cent, on average.

Obviously, not everyone can find $20,000 down the back of couch, but using a combination of some creative ideas and salary sacrificing it might be more possible than you think.

Salary sacrificing gives workers a tax reward for contributing towards their own retirement.

By contributing to your own retirement you could receive a tax benefit.

Obviously, the sooner you are able to start salary sacrificing the better, but starting late is better than not starting at all.

Any contributions you make up to $35,000 if you’re over 49 (including your employer’s contributions) will be taxed at 15 per cent, meaning if you can afford to take home, say $13.10 less per week, an extra $20 per week can go into your super.

If you do that for three years, that’s an extra $3120 in your super, with that amount growing the more you are able to sacrifice.

You can also add to your super by making an after-tax contribution. Obviously the rewards are less because you have already paid your full tax rate on that money, but there are still benefits.

A lump sum contribution will boost your super coffers, but if you earn less than $51,021 you are eligible for co-contributions from the government. If you earn less than $36,021 the government co-contribution is for 50 cents for every dollar you contribute, capped at $500.

That means if you put an extra $1000 into your super, you actually increase it by $1500.

Short of relying on an unexpected windfall to come your way, think about other ways you might be able to raise some super-boosting cash.

If you’ve crunched the numbers and feel you still aren’t on track for a retirement income that meets your needs, it’s worth considering a Transition to Retirement (TTR) option, offered by most super funds.

In this scenario, once you hit the age at which you can access your super (55 for most people approaching retirement) you would transfer it into an Income Stream product, drawing a regular income of your choosing from it.

At the same time you would reduce your working hours and use your transition to retirement payments to keep your income at the same level, meaning you’d continue to add to your super through your own and your employer’s contributions, but work less hours while enjoying the same income.

Alternatively, you could continue working full time, draw a regular income from your transition to retirement account, and salary sacrifice the difference into your super, enjoying the tax break and boosting your super at the same time.

Keep your super invested when you retire and grow your income.
Turn your super into an income stream when you retire and you can receive a regular income to top up the Age Pension, while the balance stays invested.

Everything you need to know is at industrysuper.com